Many retirees look for states with favorable tax laws especially when it comes to Social Security benefits. Florida and California are frequently cited for not having a state income tax but since they do not impose state income taxes they do not offer any particular tax benefits associated with Social Security. While nine states will continue to tax Social Security benefits in 2025 a number of other states provide more direct tax relief on these benefits. In order to lessen the tax burden on retirees these states provide a variety of exemptions, deductions or credits.
Recognizing Social Security state taxes
The vast majority of U. S. states (41 in addition to Washington D. C.) Social Security benefits are not subject to taxation. Nine states do however still levy taxes to some extent. These states frequently contend that the funds fund necessary public services. Nonetheless many provide age or income-based exemptions or deductions. State-by-state variations in the precise regulations and income thresholds should be noted. In 2025 there will be 10 states that offer social security tax benefits. Certain tax benefits pertaining to Social Security income in 2025 are provided by the states listed below.
Colorado: Although it allows deductions, Colorado taxes Social Security benefits. All of the federally taxed Social Security benefits are deductible for taxpayers 65 and older. Federally taxed benefits can be fully deducted on state income tax returns for residents between the ages of 55 and 64 whose adjusted gross income (AGI) is $75,000 or less for individuals or $95000 or less for couples filing jointly.
Connecticut: Although many citizens of Connecticut will not pay these state taxes in retirement the state does technically tax Social Security. AGIs under $75,000 for single filers (or married individuals filing separately) and below $100,000 for married couples filing jointly are exempt from state taxes. No more than 25% of Social Security benefits are taxed if a taxpayer’s AGI exceeds the Connecticut income threshold.
Minnesota: While some retirees are eligible to deduct Social Security income from their state tax return Minnesota taxes Social Security income that is deemed taxable by the federal government. Individuals with an AGI of less than $82190 and married filers with an AGI of less than $105380 are exempt from state taxes on Social Security benefits.
Montana: For individuals earning over $42200 ($21100 for single filers) the income tax rate is 5 percent. Only $5500 is deducted from the federal taxable income of taxpayers 65 and older. All of the Social Security benefits can be written off against state taxes by single filers with an AGI under $25000 and joint filers with an AGI under $32000.
New Mexico: Compared to other states New Mexico has higher income thresholds for Social Security benefit exemptions. In New Mexico Social Security benefits for joint filers earning up to $150,000 annually are exempt from state taxes and single filers earning up to $100,000 annually are exempt from state taxes.
Rhode Island: Social Security benefits are exempt from state income tax in Rhode Island for a large number of retirees. The state taxes on Social Security benefits only apply to joint filers with an AGI of $130250 or more. Only retirees with a federal AGI of $104200 or more are required to pay state taxes on Social Security benefits for the majority of other filing statuses.
Utah: While some retirees may be eligible for a Social Security benefits credit Utah taxes Social Security benefits. State taxes on benefits are waived for married couples making less than $50000 per year and for single filers making less than $30000. Another $450 retirement tax credit is available in Utah but it cannot be claimed by taxpayers who also claim the Social Security benefits credit.
Vermont: For retirees who satisfy certain income requirements Vermont permits a complete exemption of Social Security income from state taxation. In Vermont if your AGI is $65000 or less and you are married and filing jointly your Social Security benefits are tax-exempt. Married and single filers who file separately and have an AGI of $50000 or less are eligible for a full exemption.
West Virginia: West Virginia is gradually eliminating its benefit taxes by deducting a discount from its adjusted gross income (AGI). It will be possible to deduct 65% of SS benefits from AGI in 2025. No social security benefits will be subject to taxes in 2026 since all benefits can be deducted from AGI in full.
Kansas: The 2025 search results do not specifically mention Kansas but the state did pass legislation to remove its Social Security benefit tax.
Making informed decisions
Taking into account the tax implications of Social Security benefits in various states is essential when making retirement plans. Retirees may find more targeted benefits in states that offer particular deductions, exemptions or credits for Social Security income even though states like Florida and California have the benefit of no state income tax. A financial advisor consultation can offer tailored advice based on your unique financial circumstances and retirement objectives.
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